[Federal Register Volume 60, Number 29 (Monday, February 13, 1995)]
[Notices]
[Pages 8237-8239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3542]



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FEDERAL TRADE COMMISSION
[File No. 942 3029]


Orchid Technology; Proposed Consent Agreement With Analysis To 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
prohibit, among other things, a California-based company from falsely 
representing that any of its computer peripheral products had been 
rated, reviewed or endorsed by any person or publication, and from 
misrepresenting the results of any test, study or evaluation in 
connection with marketing its computer peripheral equipment. The 
consent agreement also would require the respondent to possess 
competent and reliable evidence to substantiate performance claims.

DATES: Comments must be received on or before April 14, 1995.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th Street and Pennsylvania Avenue NW., Washington, D.C. 
20580.

FOR FURTHER INFORMATION CONTACT:
Matthew Gold or Jeffrey Klurfeld, San Francisco Regional Office, 
Federal Trade Commission, 901 Market St., Suite 570, San Francisco, CA 
94103. (415) 744-7920.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the following consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of sixty (60) days. Public comment is invited. Such 
comment or views will be considered by the Commission and will be 
available for inspection and copying at its principal office in 
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of 
Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order To Cease and Desist

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Orchid Technology, a corporation, 
(``proposed respondent''), and it now appearing that the proposed 
respondent is willing to enter into an agreement containing an order to 
cease and desist from the use of the acts and practices being 
investigated,
    It is hereby agreed by and between Orchid Technology, a 
corporation, by its duly authorized officer, and its attorney, and 
counsel for the Federal Trade Commission that:
    1. Proposed respondent Orchid Technology is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of California, with its office and principal place of 
business located at 45365 Northport Loop West, Fremont, California 
94538.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint.
    3. Proposed respondent waives:
    a. Any further procedural steps;
    b. The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law; and
    c. All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement.
    4. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission, it, together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information in respect thereto publicly 
released. The Commission thereafter may either withdraw its acceptance 
of this agreement and so notify the proposed respondent, in which event 
it will take such action as it may consider appropriate, or issue and 
serve its complaint (in such form as the circumstances may require) and 
decision, in disposition of the proceeding.
    5. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondent of facts, other than 
jurisdictional facts, or of violations of law as alleged in the draft 
of complaint.
    6. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Section 2.34 of the 
Commission's Rules, the Commission may, without further notice to 
proposed respondent, (a) issue its complaint corresponding in form and 
substance with the draft of complaint and its decision containing the 
following order to cease and desist in disposition of the proceeding 
and (b) make information public in respect thereto. When so entered, 
the order to cease and desist shall have the same force and effect and 
may be altered, modified or set aside in the same manner and within the 
same time provided by statute for other orders. The order shall become 
final upon service. Delivery by the U.S. Postal Service of the 
complaint and decision containing the agreed-to order to proposed 
respondent's address as stated in this agreement shall constitute 
service. The proposed respondent [[Page 8238]] waives any right it may 
have to any other manner of service. The complaint may be used in 
construing the terms of the order, and no agreement, understanding, 
representation, or interpretation not contained in the order or the 
agreement may be used to vary or contradict the terms of the order.
    7. The proposed respondent has read the proposed complaint and 
order contemplated hereby. The proposed respondent understands that 
once the order has been issued, it will be required to file one or more 
compliance reports showing that it has fully complied with the order. 
The proposed respondent further understands that it may be liable for 
civil penalties in the amount provided by law for each violation of the 
order after it becomes final.

Order

Definition

    For purposes of this Order, the term ``computer peripheral 
equipment'' shall mean graphics cards, sound cards, adaptor cards, 
memory expansion cards, or other hardware products that enhance the 
capability and performance of personal computers.
I
    It is ordered that respondent Orchid Technology, a corporation, its 
successors and assigns, and its officers, agents, representatives and 
employees, directly or through any corporation, subsidiary, division or 
other device, in connection with the manufacturing, labelling, 
advertising, promotion, offering for sale, sale or distribution of the 
Celsius Windows Accelerator, or other computer peripheral equipment, in 
or affecting commerce, as ``commerce'' is defined in the Federal Trade 
Commission Act, do forthwith cease and desist from representing, in any 
manner, directly or by implication, that such product has been rated, 
endorsed, recommended, reviewed or evaluated by any person or 
publication, unless such is the case.
II
    It is further ordered that respondent Orchid Technology, a 
corporation, its successors and assigns, and its officers, agents, 
representatives and employees, directly or through any corporation, 
subsidiary, division or other device, in connection with the 
manufacturing, labelling, advertising promotion, offering for sale, 
sale, or distribution of the Celsius Windows Accelerator, or other 
computer peripheral equipment, in or affecting commerce, as 
``commerce'' is defined in the Federal Trade Commission Act, do 
forthwith cease and desist from misrepresenting, in any manner, 
directly or by implication, the existence, contents, validity, results, 
conclusions, interpretations or purpose of any test or study.
III
    It is further ordered that respondent Orchid Technology, a 
corporation, its successors and assigns, and its officers, agents, 
representatives and employees, directly or through any corporation, 
subsidiary, division or other device, in connection with the 
manufacturing, labelling, advertising, promotion, offering for sale, 
sale, or distribution of the Celsius Windows Accelerator, or other 
computer peripheral equipment, in or affecting commerce, as 
``commerce'' is defined in the Federal Trade Commission Act, do 
forthwith cease and desist from making any representation, in any 
manner, directly or by implication, about the performance or attributes 
of any such product, unless such representation is true and, at the 
time of making such representation, respondents possess and rely upon 
competent and reliable evidence, which when appropriate must be 
competent and reliable scientific evidence, that substantiates such 
representation. For purposes of this provision, ``competent and 
reliable scientific evidence'' shall mean tests, analyses, research, 
studies or other evidence based on the expertise of professionals in 
the relevant area, that has been conducted and evaluated in an 
objective manner by persons qualified to do so, using procedures 
generally accepted in the profession to yield accurate and reliable 
results.
IV
    It is further ordered that for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondent, or its successors and assigns, shall maintain and upon 
request make available to the Federal Trade Commission for inspection 
and copying:
    A. All materials that were relied upon in disseminating such 
representation; and
    B. All tests, reports, studies, surveys, demonstrations or other 
evidence in its possession or control that contradict, qualify, or call 
into question such representation, or the basis relied upon for such 
representation, including complaints from consumers.
V
    It is further ordered that respondent shall notify the Commission 
at least thirty (30) days prior to any proposed change in the 
respondent such as dissolution, assignment, or sale resulting in the 
emergence of a successor corporation, the creation or dissolution of 
subsidiaries, or any other change in the corporation which may affect 
compliance obligations arising under this Order.
VI
    It is further ordered that respondent shall, within ten (10) days 
from the date of service of this Order upon it, distribute a copy of 
this Order to each of its officers, agents, licensees, representatives, 
independent contractors, and employees involved in the preparation and 
placement of advertisements or promotional materials, or who is in 
communication with customers or prospective customers, or who has any 
responsibilities with respect to the subject matter of this Order.
VII
    It is further ordered that respondent shall, within sixty (60) days 
from the date of service of this Order upon them, and at such other 
times as the Commission may require, file with the Commission a report, 
in writing, setting forth in detail the manner and form in which it has 
complied with this Order.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement, subject to 
final approval, to a proposed consent order from respondent Orchid 
Technology, a California corporation.
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement and take other appropriate action or make 
final the agreement's proposed order.
    This matter concerns the advertising of the ``Celsius/VLB Windows 
Accelerator,'' a circuit board that both increases the speed at which a 
personal computer displays complex graphical images, and improves the 
quality of the graphical images. The Commission's complaint charges 
that respondent's advertising represented that excerpts from computer 
periodical reviews referred to the Celsius, when, in fact, they 
referred to products manufactured by Orchid's 
competitors. [[Page 8239]] 
    The proposed consent order contains provisions designed to remedy 
the violations charged and to prevent the respondent from engaging in 
similar acts and practices in the future.
    Part I of the proposed order prohibits respondent from falsely 
representing that any computer peripheral equipment, as defined in the 
order, has been rated, endorsed, recommended, reviewed or evaluated by 
any person or publication.
    As fencing-in relief, Part II of the proposed order prohibits 
respondent, when advertising computer peripheral equipment, from 
misrepresenting the existence, contents, validity, results, 
conclusions, interpretations or purpose of any test or study. Part III 
provides that, if respondent makes any representation about the 
performance or attributes of any computer peripheral equipment, the 
representation must be true and respondent must possess competent and 
reliable evidence, which when appropriate must be competent and 
reliable scientific evidence, to substantiate the representation.
    The proposed order also requires respondent to maintain materials 
relied upon to substantiate claims covered by the order; to provide a 
copy of the consent agreement to its employees involved in the 
preparation and placement of respondent's advertisements, or in 
communication with respondent's customers or prospective customers; to 
notify the Commission of any change in the corporate structure that 
might affect compliance with the order; and to file one or more reports 
detailing compliance with the order.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 95-3542 Filed 2-10-95; 8:45 am]
BILLING CODE 6750-01-M